Project Cycle: Approval Phase

Project approval: process and documents

The preparation process culminates with the production and approval of a Proposal for Loan Approval (PAL) or, for technical cooperation projects, a Plan of Operations, which are disclosed after approval by the Board of Executive Directors. For loan projects, Environmental and Social Management Reports and Procurement Plans are also made available at this time, generally as stand-alone documents, two weeks prior to Board consideration of the PAL.

Projects exceeding $750,000 (in IDB-administered financing) are approved by the Bank’s Board of Executive Directors; projects with $750,000 or less in IDB-administered funding may be approved by the Bank’s President, Country Office Representative or Country Department Manager, depending on the amount and type of the project.

Results Framework: Project teams also develop a results framework for the project (that is usually included as an annex to the Proposal for Loan Approval document). The results framework details the project’s specific goals and expected outcomes and outputs, broken out by project component. It also lists any assumptions the team has made and provides specific indicators for evaluating outcomes and the means for their verification.

Procurement plans: Procurement plans are prepared by the borrower and initially included as part of the loan proposal or plan of operations. They contain a brief description of the procurement foreseen for the project in the upcoming 18 months, an estimated budget for the various tenders for bids into which the procurement will be grouped, the source of financing and method of procurement for each bid, the estimated date for the first notice for bidding or prequalification (if applicable), and the status of the procurement. Procurement plans are updated each year for projects in implementation and made available on the Bank’s website.

Proposals for Loan Approval: Project team leaders produce Proposals for Loan Approval (PALs) documents for all public sector projects under consideration for IDB financing prior to submitting them to the IDB’s Board of Executive Directors for approval. These documents are released to the public after the loans are approved. They can be up to 12 pages in length, plus annexes. PALs contain background information on the country, the project implementing agency, donor coordination, and the Bank’s strategies relating to the project; a detailed description of the project’s objectives, activities and budget; the project’s implementation plan and timetable; and a section on the project’s viability, risks and expected environmental and social impacts.

Plans of operations: Project team leaders produce plans of operations for all technical cooperation (TC) programs under consideration for IDB financing or IDB-administered trust fund financing prior to their approval. These documents are released to the public after the TC programs are approved. They can be up to 10 pages in length. Plans of operations contain background information on the program, the project implementing agency, and the Bank’s strategies relating to the TC; a detailed description of the TC’s objectives, activities and budget; the TC’s implementation plan and timetable; and sections on the TC’s benefits, risks, expected environmental and social impacts and monitoring activities.

Environmental and social management reports: Environmental and social management reports (ESMRs) are presented in the body of loan (or guarantee) proposals for both public and private sector projects under the heading “Environmental and Social Feasibility” or as annexes to the loan (or guarantee) proposal. ESMRs are disclosed to the public as stand-alone documents prior to project approval by the Board of Executive Directors. They consist of background information about the project, and a plan to avoid, mitigate, compensate and monitor the key negative social/environmental impacts of the project.

Since the Bank doesn’t finance the entire cost of a project, other organizations may also provide funds for IDB-financed projects through co-financing arrangements. In the case of projects with co-financing, approval by the IDB authorizes only the portion of project financing to be provided by the IDB. Projects with co-financing may require approval by the board(s) of the co-financing organization(s) before they can begin to be implemented.

Some countries require parliamentary approval before a project can go forward, while in others, approval by the executive branch of government is sufficient. After the Bank and borrower sign the loan contract and the project becomes effective, implementation begins.

Loan contracts: After they have been signed and have entered into effect, public sector loan contracts, guarantee agreements, technical cooperation agreements and agreements under the Social Entrepreneurship Program that have been entered into by the Bank or the Multilateral Investment Fund (MIF) are made available to the public.

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